Tensions between China and the United States arise due to competition in economics and technology. In addition, the two countries compete for global influence, with the US strengthening alliances in the Indo-Pacific and China pushing its Belt and Road initiative to expand its influence.
Growing tensions during Donald Trump's first term led Apple to gradually move its production from China to India to avoid price increases due to high tariffs. By April 2024, about 14% of all iPhones will have been produced in India. According to a Times of India report, Apple makes 40-43 million iPhone units from the country annually.
Apple is moving iPhone production to India for several reasons!
1. Supply Chain Diversification
Apple wants to reduce its dependence on China, especially after the COVID-19 pandemic that affected global production. Diversifying into India helps minimize risk in the event of political, economic, or health disruptions in one country.
2. US-China tensions
The relationship between the US and China has become increasingly tense due to trade wars, import tariffs, and national security issues. Production in India helps Apple avoid high tariffs on goods from China and the risk of technology restrictions.
3. Incentives from the Indian Government
The Indian government offers various incentives, including tax breaks and subsidies, to attract foreign investment in the manufacturing sector. Apple and its partners, such as Foxconn and Wistron, benefit from these policies.
4. Large and Growing Market
India is the second-largest smartphone market in the world. By manufacturing iPhones in India, Apple not only saves on import costs but can also increase local sales with more competitive prices.
5. Labor and Cost
Labor costs in India are lower than in China. This gives Apple a long-term advantage in reducing production costs.
Why India?
India was chosen because it has the second-largest smartphone market in the world and has become a strategic location for Apple. Companies such as Foxconn and Wistron already operate in India, assembling various iPhone models. In addition, India offers government incentives and policies that favor foreign investment. By moving production to India, Apple hopes to mitigate the negative impact of trade tariffs and strengthen its position in the global market.
Apple's move to move iPhone production to India reflects the company's long-term strategy in the face of global uncertainty. Amid geopolitical tensions between the US and China, as well as post-pandemic supply chain challenges, India has emerged as an ideal location thanks to government policy support, cost efficiency, and a large potential domestic market. This decision is not just about production efficiency, but also Apple's efforts to strengthen its position in an increasingly competitive global market.